Dr. Harald Hagedorn
SAP AG
Patenting
Software and Services
-stakeholder
view-OECD Conference IPR, innovation and economic performance 28-29 August 2003
Patenting Software and Services, Harald Hagedorn / 2
Principles of the Patent System
-provide protection to technical principles -stimulate and support technical innovation -create competition “Win in product, win in patent” -create economic growthPatent system
What is the problem with software ?
Patenting Software and Services, Harald Hagedorn / 3
Revenue with Software Products by region
0 20 40 60 80 100 2000 2001 2002 YEAR BI L L US $ ROW Asia/Pacific W. Europe N. America Source: IDC Software economy
Patenting Software and Services, Harald Hagedorn / 4
Europe: Software Economy
1996
Revenue: € 37 bill. Tax revenue: € 15 bill. Jobs: 340.000
2001
Revenue: € 60. bill. Tax revenue: € 22 bill. Jobs: 430.000
(Source: PWC 5/1996, The Contribution of the Packed Software Industryto the European Economy)
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Views on software Technical view
PAST : mainframe computing, minicomputers TODAY : personal computing
pervasive computing embedded computing PROBLEM TODAY :
software is expensive to develop, but easy to copy
Legal view
PAST : Copyright protection only
TODAY: Copyright protection, patent protection QUESTION TODAY :
What is the best way to protect software in a competitive market?
STANDARDS FOR VALIDITY STANDARDS FOR INFRINGEMENT SUBJECT MATTER DURATION OF PROTECTION PROTECTION BEGINS OWNER
Originality & fixation in a tangible medium of Originality, novelty,
nonbviousness
Copying and improper appropriation Scope of protection defined by scope of patent claims Literary, dramatic,musical, scientific work
Protects Computer Code (Source code, Object code) Protects technical
ideas, concepts, principles
Protection for 50 to 120 years
Protection for max. 20 years
upon creation, fixation of original expression Granted after
examination by Patent Office
Author creating &, fixating original expression Applicant filing request
before Patent Office
Copyright
Utility patent
Patenting Software and Services, Harald Hagedorn / 7 Legal Background Legal Background Legal Background Legal Background Patents:
- National Patent Laws - European Patent Convention - Patent Cooperation Treaty (PCT)
-- Directive on the patentability of computer-implemented inventions
Copyright:
- National Copyright Acts
- European Union Directive 91/250/EC on the legal protection of computer programs
- Berne Union for the Protection of Literary and Artistic Property
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Limitations with software patents Traditionally disallowed
n some statute laws exclude programs for computers as such; Art 52(2,3)
influence on patent filing strategy
Prior art poorly codified
lack of long-term patent data base
Patent system moves more slowly than the software industry
n issue of software patent might take more than 3 years i.e. longer than normal software innovation cycle
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Advantages of Patent Protection Advantages of Patent ProtectionAdvantages of Patent Protection Advantages of Patent Protection
Scope
•If claimed properly broader scope than copyright
Independent Creation
•Protection against independent creation
-computer program developed first subject to patent protection Monopoly
•Patent protection allows to exclude others from making, using, selling, importing
•no proof of copying by infringer
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Advantages AdvantagesAdvantages
Advantages of Copyright Protectionof Copyright Protectionof Copyright Protectionof Copyright Protection
Lower standard
•lower threshold compared to required inventive step Less expensive
•average costs : software patents 20.000 – 50.000 € copyright registration: < 1.000 € Shorter time to effect protection
•patent issued 2 – 3 years after filing
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Patent OR Copyright Patent OR Copyright Patent OR Copyright Patent OR Copyright
Legal view
-predictability to get software patents granted
-predictability to the resolution of software patent and copyright litigation cases
Technological view
-What kind of innovation is important to your software development ?
•Incremental or fundamental changes
•hardware innovation
-What is the product life cycle of your software ?
•compared to term of right
Business view
-
What are the grounds for competition ?u market share, speed, quality, support
u price u software innovation 0 6000 12000 1995 1996 1997 1998 1999 2000
Year
US Patents / IPC Class G06F
DE JP US Total USPTO software patent applications
Patenting Software and Services, Harald Hagedorn / 13 0 500 1000 1500 2000 1995 19961997 1998 1999 2000 Year EPA, IPC G06F DE JP US Total
Granted Software Patents: ca. 20000 +
EPO Software patent applications US , JP , EP , DEPatenting Software and Services, Harald Hagedorn / 14
Software patents issued in 2000
Who owns Software patents?
Patents issued in year 2000
JP 18% US 80% DE 2% JP 34% US 59% DE 7%
US patents
EPO patents
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What kinds of things can IP protect in software?
Interfaces (User and other) Language & extensions Data structures Tools Business methods Features/Functionality Integration E-commerce solutions Internet solutions Debugger Operating systems File systems
Graphics & windowing systems
Compilers & simulators
Cryptography & data compression
Data storage and retrieval
software you can think of . . .
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Why do companies apply for software patents ?
•
Provide competitive advantage•
Protect your investment•
Control market growth•
Revenue generation• Product exploitation Licensing programs
Help form strategic alliances with partners
•
Access to underlying technology in exchange for state of the art•
Legitimization• Market
• Investors
•
Cross-license• Avoid blocking patents
• Avert litigation
•
Counter claim is best defense in patent litigationPatenting Software and Services, Harald Hagedorn / 17
current issues with software patents in Europe
Objectives to be adressed by EU directive on CII
n Harmonization among EU member states
uWhat makes a computer implemented invention technical?
n Legal certainty, transparency, clarity of law
n Enforceability of granted software patents
n Rise awareness for software patents
n How to deal with business method patents
Business method patents
Methods for doing business
n Teaching
n Selling, Trading
n Valuation of assets e.g. risk evaluation
n Insurance
n Financial
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Business method patents
SW BM Patents US-EU
0 3000 6000 9000 12000 15000 18000 1980 1990 1995 1997 1998 Year Nu mb e r Business method US patents Software patents Europe Software patents USPatenting Software and Services, Harald Hagedorn / 20 Conclusion
- patentability of software is a challenge to the patent system - software patents are reality
- software companies can’t ignore them - open questions exist on
n quality standard in granting software patents
n cross boarder enforcement of software patents
One hundred years ago, companies made products. Manufacturing drove the economy.
Now it’s all about ideas. Knowledge is the foundation of today’s economy. In fact, up to 85% of the market capitalization of today’s Fortune 500 now lies in intellectual assets, rather than traditional tangible assets.
